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- The altcoin season indicator showed that investors need to bide their time.
- Participants will need to be more selective in their bets on altcoins this tournament due to the flood of new tokens.
Bitcoin [BTC] It was trading at $61.5K at press time, just 3% above the low range of $59.7K. This lower range was defended in the first half of May and led the bulls to a rally to $72K but were unable to sustain it.
A return to this pivotal support means that the consolidation phase is still in place and BTC is not ready for an uptrend yet. the Liquidity block Below $60,000 could draw prices in, forcing a deeper correction than most participants expect.
When the king of cryptocurrencies struggles to establish an uptrend after the halving, it makes sense that most altcoins will also experience downward pressure. The capital inflow to support altcoin rallies is not there yet.
Investigating the Altcoin Season Index – The readings are not hopeful
source: Blockchain Center
The Altcoin Season Index attempts to gauge market sentiment and whether Bitcoin or the altcoin sector is performing better. If 75% of the top 50 altcoins perform better than BTC over a 90-day period, it is said to be altcoin season.
We are far from such a scenario. This is because the market lacks the type of capital flows and speculative interest that drives altcoin season.
Traditionally, once Bitcoin makes a big upward move, it tends to consolidate. During this time, Bitcoin holders choose to move some of their funds into altcoins, betting on huge gains in assets that are much riskier than Bitcoin based on fundamental analysis, token economics, and market sentiment.
Therefore, before an alternative season occurs, we will need Bitcoin to make significant gains, as happened from October 2023 to January 2024.
Long-term effects of the dominance scheme
Source: BTC.D on TradingView
The 2021 altcoin season officially ran from March to June 2021, based on the Altcoin Season Index. However, when studying the BTC.D chart above, we see that Bitcoin dominance began a downward trend in early 2021 and began to recover in the second half of the same year.
Hence, the sharp decline in BTC.D is a major catalyst for altcoin seasons – it highlights the growth of the altcoin sector compared to Bitcoin.
Since March, the altcoin market has been in a downtrend. While the higher time frame trend has been positive, the current pullback has been brutal.
is reading Bitcoin [BTC] Price prediction 2024-25
Dilution of the altcoin pool and stable token opening from existing projects means that demand will have to grow strongly just to keep up with the swelling altcoin market.
In turn, this could see extraordinary gains concentrated among fewer alternatives in this cycle than in 2021 or 2017, and returns could diminish more than in previous cycles as well because participants are no longer early.
